CIP- Restricting account use

Just trying to get the wheels turning on this rainy Friday morning (I'm still on my first cup of coffee.)

How is everyone approaching restricting the use of an account when id information is incomplete/incorrect? I'm trying to develop a set of restrictions based on the type of account and the nature of the missing/incorrect information. For time deposits, this is fairly simple (no redemption until we get all id info.) But checking accounts (especially joint accounts) are posing quite a headache. Rejecting checks signed by an unverified owner would create an operational nightmare (not to mention a sour customer.) So I'm leaning more toward not issuing debit cards, online banking id, etc. to those with missing information. But then that allows customers who don't use those services anyway to skirt the CIP requirements. It may just be the way I read the reg, but this seems to be the biggest gray area in CIP. Thoughts?

We simply state, if you do not give us the information, we will not open the account. We had one situation that we opened an account, could not verify employment information and immediately closed the account. We are not going to mess around. Grrr!

And that's the stance we're taking for in-person account openings, too. But when we get into joint accounts (with one owner present for opening) and accounts opened by mail, it gets a little trickier. Also, I'm considering situations where we use a positive id verification service, and some of the information comes back as a mismatch. (These inquiries are done the day after the account is opened.)

We have discussed this, and while everything at this point is subject to change, we have decided that if someone comes in alone to open a joint account and does not have all the necessary information (name, DOB, address, TIN) we will either open the account as a sole owner account for the person who is present and add the secondary signer once the information is received, or we will refuse the account. As long as the person has the required 4 pieces of info for the missing person, we will open it jointly, because we can rely on non-documentary verification for the secondary signer. This will only be the case for lower risk accounts. For high-risk accounts, like check-cashing companies or money transmitters, we may be more restrictive and require both identification AND verification prior to opening the account.
BC

A presenter at a seminar I attended suggested using Reg CC holds on new accounts. This will delay the use of the funds at least for a few days.

Oh please - that is far from a sound policy and is not the intended use of Reg CC. What are you going to do about cash deposits and next-day items under $5,000?

Sorry, just a suggestion given at a seminar.

The "oh please" wasn't directed at you Lewis, but at the seminar speaker. I find it appalling when "experts" get in front of a class and make such statements.

1. Lets say all information provided has been verified under our CIP Program, except the customer is applying for a TIN. We obtain proof of the application for a TIN. We conduct our risk based analysis and open the loan. Now, if after a reasonable period of time, the customer has not produced the TIN, aren't we required to close the account? How do we close a loan account?
2. Also, please help me understand the definition of "signatory". I have read and re-read the threads covering this, but I am still confused. Co-applicants, co-signers, guarantors(?), co-makers, are covered. Does signatory only apply to those authorized under a corporate resolution, or similar dicument, to conduct transactions for a business?
3. Just curious - If readers would be so kind as to respond - I'd like to survey as to how many banks are going to use an outside vendor for ID verification, vs leaving it to the subjectivity of the account servicer. Could you also give me your approximate asset size? NOTE: I'm not asking for the name of the vendor(unless you are comfortable in disclosing). Thanks everyone.

We have been documenting all signers on commercial accounts for some time and we plan to continue.

Quote:

---

The "oh please" wasn't directed at you Lewis, but at the seminar speaker. I find it appalling when "experts" get in front of a class and make such statements.

---

You know, sometimes presenters are not putting themselves forth as "experts." I don't know anything about this particular situation, but I'm just a day-to-day compliance officer like many of you here. Sometimes I'm asked to give presentations at meetings outside the bank (and I usually accept).

I think we should give this poor guy or gal a break. When you're trying to answer a tough question about a brand new regulation, sometimes you just throw out possible ideas. I think the Reg CC hold idea is a valid option and does not circumvent adequate controls. This represents the creative use of the provisions of one regualtion to help you comply with another.